southern cross cement corporation vs pcmc
TRANSCRIPT
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
1/39
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 158540 July 8, 2004
SOUTHERN CROSS CEMENT CORPORATION, petitioner,
vs.
THE PHILIPPINE CEMENT MANUFACTURERS CORP., THE SECRETARY
OF THE DEPARTMENT OF TRADE & INDUSTRY, THE SECRETARY OF
THE DEPARTMENT OF FINANCE, and THE COMMISSIONER OF THE
BUREAU OF CUSTOMS, respondents.
D E C I S I O N
TINGA, J.:
"Good fences make good neighbors," so observed Robert Frost, the
archetype of traditional New England detachment. The Frost ethos has been
heeded by nations adjusting to the effects of the liberalized global market.1
The Philippines, for one, enacted Republic Act (Rep. Act) No. 8751 (on theimposition of countervailing duties), Rep. Act No. 8752 (on the imposition of
anti-dumping duties) and, finally, Rep. Act No. 8800, also known as the
Safeguard Measures Act ("SMA")2 soon after it joined the General Agreement
on Tariff and Trade (GATT) and the World Trade Organization (WTO)
Agreement.3
The SMA provides the structure and mechanics for the imposition of
emergency measures, including tariffs, to protect domestic industries and
producers from increased imports which inflict or could inflict serious injury on
them.4 The wisdom of the policies behind the SMA, however, is not put intoquestion by the petition at bar. The questions submitted to the Court relate to
the means and the procedures ordained in the law to ensure that the
determination of the imposition or non-imposition of a safeguard measure is
proper.
Antecedent Facts
Petitioner Southern Cross Cement Corporation ("Southern Cross") is a
domestic corporation engaged in the business of cement manufacturing,
production, importation and exportation. Its principal stockholders are TaiheiyoCement Corporation and Tokuyama Corporation, purportedly the largest
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
2/39
cement manufacturers in Japan.5
Private respondent Philippine Cement Manufacturers Corporation6
("Philcemcor") is an association of domestic cement manufacturers. It has
eighteen (18) members,7 per Record. While Philcemcor heralds itself to be an
association of domestic cement manufacturers, it appears that considerable
equity holdings, if not controlling interests in at least twelve (12) of its
member-corporations, were acquired by the three largest cement
manufacturers in the world, namely Financiere Lafarge S.A. of France, Cemex
S.A. de C.V. of Mexico, and Holcim Ltd. of Switzerland (formerly Holderbank
Financiere Glaris, Ltd., then Holderfin B.V.).8
On 22 May 2001, respondent Department of Trade and Industry ("DTI")
accepted an application from Philcemcor, alleging that the importation of gray
Portland cement9 in increased quantities has caused declines in domestic
production, capacity utilization, market share, sales and employment; as wellas caused depressed local prices. Accordingly, Philcemcor sought the
imposition at first of provisional, then later, definitive safeguard measures on
the import of cement pursuant to the SMA. Philcemcor filed the application in
behalf of twelve (12) of its member-companies.10
After preliminary investigation, the Bureau of Import Services of the DTI,
determined that critical circumstances existed justifying the imposition of
provisional measures.11 On 7 November 2001, the DTI issued an Order,
imposing a provisional measure equivalent to Twenty Pesos and Sixty
Centavos (P20.60) per forty (40) kilogram bag on all importations of grayPortland cement for a period not exceeding two hundred (200) days from the
date of issuance by the Bureau of Customs (BOC) of the implementing
Customs Memorandum Order.12 The corresponding Customs Memorandum
Order was issued on 10 December 2001, to take effect that same day and to
remain in force for two hundred (200) days.13
In the meantime, the Tariff Commission, on 19 November 2001, received a
request from the DTI for a formal investigation to determine whether or not to
impose a definitive safeguard measure on imports of gray Portland cement,
pursuant to Section 9 of the SMA and its Implementing Rules andRegulations. A notice of commencement of formal investigation was published
in the newspapers on 21 November 2001. Individual notices were likewise
sent to concerned parties, such as Philcemcor, various importers and
exporters, the Embassies of Indonesia, Japan and Taiwan,
contractors/builders associations, industry associations, cement workers'
groups, consumer groups, non-government organizations and concerned
government agencies.14 A preliminary conference was held on 27 November
2001, attended by several concerned parties, including Southern Cross.15
Subsequently, the Tariff Commission received several position papers both in
support and against Philcemcor's application.16 The Tariff Commission alsovisited the corporate offices and manufacturing facilities of each of the
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
3/39
applicant companies, as well as that of Southern Cross and two other cement
importers.17
On 13 March 2002, the Tariff Commission issued its Formal Investigation
Report ("Report"). Among the factors studied by the Tariff Commission in its
Report were the market share of the domestic industry,18 production and
sales,19 capacity utilization,20 financial performance and profitability,21 and
return on sales.22 The Tariff Commission arrived at the following conclusions:
1. The circumstances provided in Article XIX of GATT 1994 need not be
demonstrated since the product under consideration (gray Portland cement) is
not the subject of any Philippine obligation or tariff concession under the WTO
Agreement. Nonetheless, such inquiry is governed by the national legislation
(R.A. 8800) and the terms and conditions of the Agreement on Safeguards.
2. The collective output of the twelve (12) applicant companies constitutes amajor proportion of the total domestic production of gray Portland cement and
blended Portland cement.
3. Locally produced gray Portland cement and blended Portland cement
(Pozzolan) are "like" to imported gray Portland cement.
4. Gray Portland cement is being imported into the Philippines in increased
quantities, both in absolute terms and relative to domestic production, starting
in 2000. The increase in volume of imports is recent, sudden, sharp and
significant.
5. The industry has not suffered and is not suffering significant overall
impairment in its condition, i.e., serious injury.
6. There is no threat of serious injury that is imminent from imports of gray
Portland cement.
7. Causation has become moot and academic in view of the negative
determination of the elements of serious injury and imminent threat of serious
injury.23
Accordingly, the Tariff Commission made the following recommendation, to
wit:
The elements of serious injury and imminent threat of serious injury not
having been established, it is hereby recommended that no definitive general
safeguard measure be imposed on the importation of gray Portland
cement.24
The DTI received the Report on 14 March 2002. After reviewing the report,then DTI Secretary Manuel Roxas II ("DTI Secretary") disagreed with the
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
4/39
conclusion of the Tariff Commission that there was no serious injury to the
local cement industry caused by the surge of imports.25 In view of this
disagreement, the DTI requested an opinion from the Department of Justice
("DOJ") on the DTI Secretary's scope of options in acting on the
Commission's recommendations. Subsequently, then DOJ Secretary
Hernando Perez rendered an opinion stating that Section 13 of the SMA
precluded a review by the DTI Secretary of the Tariff Commission's negative
finding, or finding that a definitive safeguard measure should not be
imposed.26
On 5 April 2002, the DTI Secretary promulgated a Decision. After quoting the
conclusions of the Tariff Commission, the DTI Secretary noted the DTI's
disagreement with the conclusions. However, he also cited the DOJ Opinion
advising the DTI that it was bound by the negative finding of the Tariff
Commission. Thus, he ruled as follows:
The DTI has no alternative but to abide by the [Tariff] Commission's
recommendations.
IN VIEW OF THE FOREGOING, and in accordance with Section 13 of RA
8800 which states:
"In the event of a negative final determination; or if the cash bond is in excess
of the definitive safeguard duty assessed, the Secretary shall immediately
issue, through the Secretary of Finance, a written instruction to the
Commissioner of Customs, authorizing the return of the cash bond or theremainder thereof, as the case may be, previously collected as provisional
general safeguard measure within ten (10) days from the date a final decision
has been made; Provided, that the government shall not be liable for any
interest on the amount to be returned. The Secretary shall not accept for
consideration another petition from the same industry, with respect to the
same imports of the product under consideration within one (1) year after the
date of rendering such a decision."
The DTI hereby issues the following:
The application for safeguard measures against the importation of gray
Portland cement filed by PHILCEMCOR (Case No. 02-2001) is hereby
denied.27 (Emphasis in the original)
Philcemcor received a copy of the DTI Decision on 12 April 2002. Ten days
later, it filed with the Court of Appeals a Petition for Certiorari, Prohibition and
Mandamus28 seeking to set aside the DTI Decision, as well as the Tariff
Commission's Report. Philcemcor likewise applied for a Temporary
Restraining Order/Injunction to enjoin the DTI and the BOC from
implementing the questioned Decision and Report. It prayed that the Court ofAppeals direct the DTI Secretary to disregard the Report and to render
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
5/39
judgment independently of the Report. Philcemcor argued that the DTI
Secretary, vested as he is under the law with the power of review, is not
bound to adopt the recommendations of the Tariff Commission; and, that the
Report is void, as it is predicated on a flawed framework, inconsistent
inferences and erroneous methodology.29
On 10 June 2002, Southern Cross filed its Comment.30 It argued that the
Court of Appeals had no jurisdiction over Philcemcor's Petition, for it is on the
Court of Tax Appeals ("CTA") that the SMA conferred jurisdiction to review
rulings of the Secretary in connection with the imposition of a safeguard
measure. It likewise argued that Philcemcor's resort to the special civil action
of certiorari is improper, considering that what Philcemcor sought to rectify is
an error of judgment and not an error of jurisdiction or grave abuse of
discretion, and that a petition for review with the CTA was available as a plain,
speedy and adequate remedy. Finally, Southern Cross echoed the DOJ
Opinion that Section 13 of the SMA precludes a review by the DTI Secretaryof a negative finding of the Tariff Commission.
After conducting a hearing on 19 June 2002 on Philcemcor's application for
preliminary injunction, the Court of Appeals' Twelfth Division31 granted the
writ sought in its Resolution dated 21 June 2002.32 Seven days later, on 28
June 2002, the two-hundred (200)-day period for the imposition of the
provisional measure expired. Despite the lapse of the period, the BOC
continued to impose the provisional measure on all importations of Portland
cement made by Southern Cross. The uninterrupted assessment of the tariff,
according to Southern Cross, worked to its detriment to the point that thecontinued imposition would eventually lead to its closure.33
Southern Cross timely filed a Motion for Reconsideration of the Resolution on
9 September 2002. Alleging that Philcemcor was not entitled to provisional
relief, Southern Cross likewise sought a clarificatory order as to whether the
grant of the writ of preliminary injunction could extend the earlier imposition of
the provisional measure beyond the two hundred (200)-day limit imposed by
law. The appeals' court failed to take immediate action on Southern Cross's
motion despite the four (4) motions for early resolution the latter filed between
September of 2002 and February of 2003. After six (6) months, on 19February 2003, the Court of Appeals directed Philcemcor to comment on
Southern Cross's Motion for Reconsideration.34 After Philcemcor filed its
Opposition35 on 13 March 2003, Southern Cross filed another set of four (4)
motions for early resolution.
Despite the efforts of Southern Cross, the Court of Appeals failed to directly
resolve the Motion for Reconsideration. Instead, on 5 June 2003, it rendered a
Decision,36 granting in part Philcemcor's petition. The appellate court ruled
that it had jurisdiction over the petition for certiorari since it alleged grave
abuse of discretion. It refused to annul the findings of the Tariff Commission,citing the rule that factual findings of administrative agencies are binding upon
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
6/39
the courts and its corollary, that courts should not interfere in matters
addressed to the sound discretion and coming under the special technical
knowledge and training of such agencies.37 Nevertheless, it held that the DTI
Secretary is not bound by the factual findings of the Tariff Commission since
such findings are merely recommendatory and they fall within the ambit of the
Secretary's discretionary review. It determined that the legislative intent is to
grant the DTI Secretary the power to make a final decision on the Tariff
Commission's recommendation.38 The dispositive portion of the Decision
reads:
WHEREFORE, based on the foregoing premises, petitioner's prayer to set
aside the findings of the Tariff Commission in its assailed Report dated March
13, 2002 is DENIED. On the other hand, the assailed April 5, 2002 Decision of
the Secretary of the Department of Trade and Industry is hereby SET ASIDE.
Consequently, the case is REMANDED to the public respondent Secretary of
Department of Trade and Industry for a final decision in accordance with RA8800 and its Implementing Rules and Regulations.
SO ORDERED.39
On 23 June 2003, Southern Cross filed the present petition, assailing the
appellate court's Decision for departing from the accepted and usual course of
judicial proceedings, and not deciding the substantial questions in accordance
with law and jurisprudence. The petition argues in the main that the Court of
Appeals has no jurisdiction over Philcemcor's petition, the proper remedy
being a petition for review with the CTA conformably with the SMA, and; thatthe factual findings of the Tariff Commission on the existence or non-existence
conditions warranting the imposition of general safeguard measures are
binding upon the DTI Secretary.
The timely filing of Southern Cross's petition before this Court necessarily
prevented the Court of Appeals Decision from becoming final.40 Yet on 25
June 2003, the DTI Secretary issued a new Decision, ruling this time that that
in light of the appellate court's Decision there was no longer any legal
impediment to his deciding Philcemcor's application for definitive safeguard
measures.41 He made a determination that, contrary to the findings of theTariff Commission, the local cement industry had suffered serious injury as a
result of the import surges.42 Accordingly, he imposed a definitive safeguard
measure on the importation of gray Portland cement, in the form of a definitive
safeguard duty in the amount of P20.60/40 kg. bag for three years on
imported gray Portland Cement.43
On 7 July 2003, Southern Cross filed with the Court a "Very Urgent
Application for a Temporary Restraining Order and/or A Writ of Preliminary
Injunction" ("TRO Application"), seeking to enjoin the DTI Secretary from
enforcing his Decision of 25 June 2003 in view of the pending petition beforethis Court. Philcemcor filed an opposition, claiming, among others, that it is
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
7/39
not this Court but the CTA that has jurisdiction over the application under the
law.
On 1 August 2003, Southern Cross filed with the CTA a Petition for Review,
assailing the DTI Secretary's 25 June 2003 Decision which imposed the
definite safeguard measure. Prescinding from this action, Philcemcor filed
with this Court a Manifestation and Motion to Dismiss in regard to Southern
Cross's petition, alleging that it deliberately and willfully resorted to forum-
shopping. It points out that Southern Cross's TRO Application seeks to enjoin
the DTI Secretary's second decision, while its Petition before the CTA prays
for the annulment of the same decision.44
Reiterating its Comment on Southern Cross's Petition for Review, Philcemcor
also argues that the CTA, being a special court of limited jurisdiction, could
only review the ruling of the DTI Secretary when a safeguard measure is
imposed, and that the factual findings of the Tariff Commission are not bindingon the DTI Secretary.45
After giving due course to Southern Cross's Petition, the Court called the case
for oral argument on 18 February 2004.46 At the oral argument, attended by
the counsel for Philcemcor and Southern Cross and the Office of the Solicitor
General, the Court simplified the issues in this wise: (i) whether the Decision
of the DTI Secretary is appealable to the CTA or the Court of Appeals; (ii)
assuming that the Court of Appeals has jurisdiction, whether its Decision is in
accordance with law; and, (iii) whether a Temporary Restraining Order is
warranted.47
During the oral arguments, counsel for Southern Cross manifested that due to
the imposition of the general safeguard measures, Southern Cross was forced
to cease operations in the Philippines in November of 2003.48
Propriety of the Temporary Restraining Order
Before the merits of the Petition, a brief comment on Southern Cross's
application for provisional relief. It sought to enjoin the DTI Secretary from
enforcing the definitive safeguard measure he imposed in his 25 June 2003Decision. The Court did not grant the provisional relief for it would be
tantamount to enjoining the collection of taxes, a peremptory judicial act which
is traditionally frowned upon,49 unless there is a clear statutory basis for it.50
In that regard, Section 218 of the Tax Reform Act of 1997 prohibits any court
from granting an injunction to restrain the collection of any national internal
revenue tax, fee or charge imposed by the internal revenue code.51 A similar
philosophy is expressed by Section 29 of the SMA, which states that the filing
of a petition for review before the CTA does not stop, suspend, or otherwise
toll the imposition or collection of the appropriate tariff duties or the adoption
of other appropriate safeguard measures.52 This evinces a clear legislativeintent that the imposition of safeguard measures, despite the availability of
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
8/39
judicial review, should not be enjoined notwithstanding any timely appeal of
the imposition.
The Forum-Shopping Issue
In the same breath, we are not convinced that the allegation of forum-
shopping has been duly proven, or that sanction should befall upon Southern
Cross and its counsel. The standard by Section 5, Rule 7 of the 1997 Rules of
Civil Procedure in order that sanction may be had is that "the acts of the party
or his counsel clearly constitute willful and deliberate forum shopping."53 The
standard implies a malicious intent to subvert procedural rules, and such state
of mind is not evident in this case.
The Jurisdictional Issue
On to the merits of the present petition.
In its assailed Decision, the Court of Appeals, after asserting only in brief that
it had jurisdiction over Philcemcor's Petition, discussed the issue of whether or
not the DTI Secretary is bound to adopt the negative recommendation of the
Tariff Commission on the application for safeguard measure. The Court of
Appeals maintained that it had jurisdiction over the petition, as it alleged grave
abuse of discretion on the part of the DTI Secretary, thus:
A perusal of the instant petition reveals allegations of grave abuse of
discretion on the part of the DTI Secretary in rendering the assailed April 5,2002 Decision wherein it was ruled that he had no alternative but to abide by
the findings of the Commission on the matter of safeguard measures for the
local cement industry. Abuse of discretion is admittedly within the ambit of
certiorari.
Grave abuse of discretion implies such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction. It is alleged that, in the
assailed Decision, the DTI Secretary gravely abused his discretion in
wantonly evading to discharge his duty to render an independent
determination or decision in imposing a definitive safeguard measure.54
We do not doubt that the Court of Appeals' certiorari powers extend to
correcting grave abuse of discretion on the part of an officer exercising judicial
or quasi-judicial functions.55 However, the special civil action of certiorari is
available only when there is no plain, speedy and adequate remedy in the
ordinary course of law.56 Southern Cross relies on this limitation, stressing
that Section 29 of the SMA is a plain, speedy and adequate remedy in the
ordinary course of law which Philcemcor did not avail of. The Section reads:
Section 29. Judicial Review. Any interested party who is adversely affectedby the ruling of the Secretary in connection with the imposition of a safeguard
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
9/39
measure may file with the CTA, a petition for review of such ruling within thirty
(30) days from receipt thereof. Provided, however, that the filing of such
petition for review shall not in any way stop, suspend or otherwise toll the
imposition or collection of the appropriate tariff duties or the adoption of other
appropriate safeguard measures, as the case may be.
The petition for review shall comply with the same requirements and shall
follow the same rules of procedure and shall be subject to the same
disposition as in appeals in connection with adverse rulings on tax matters to
the Court of Appeals.57 (Emphasis supplied)
It is not difficult to divine why the legislature singled out the CTA as the court
with jurisdiction to review the ruling of the DTI Secretary in connection with the
imposition of a safeguard measure. The Court has long recognized the
legislative determination to vest sole and exclusive jurisdiction on matters
involving internal revenue and customs duties to such a specialized court.58By the very nature of its function, the CTA is dedicated exclusively to the
study and consideration of tax problems and has necessarily developed an
expertise on the subject.59
At the same time, since the CTA is a court of limited jurisdiction, its jurisdiction
to take cognizance of a case should be clearly conferred and should not be
deemed to exist on mere implication.60 Concededly, Rep. Act No. 1125, the
statute creating the CTA, does not extend to it the power to review decisions
of the DTI Secretary in connection with the imposition of safeguard
measures.61 Of course, at that time which was before the advent of tradeliberalization the notion of safeguard measures or safety nets was not yet in
vogue.
Undeniably, however, the SMA expanded the jurisdiction of the CTA by
including review of the rulings of the DTI Secretary in connection with the
imposition of safeguard measures. However, Philcemcor and the public
respondents agree that the CTA has appellate jurisdiction over a decision of
the DTI Secretary imposing a safeguard measure, but not when his ruling is
not to impose such measure.
In a related development, Rep. Act No. 9282, enacted on 30 March 2004,
expressly vests unto the CTA jurisdiction over "[d]ecisions of the Secretary of
Trade and Industry, in case of nonagricultural product, commodity or article
xxx involving xxx safeguard measures under Republic Act No. 8800, where
either party may appeal the decision to impose or not to impose said
duties."62 Had Rep. Act No. 9282 already been in force at the beginning of
the incidents subject of this case, there would have been no need to make
any deeper inquiry as to the extent of the CTA's jurisdiction. But as Rep. Act
No. 9282 cannot be applied retroactively to the present case, the question of
whether such jurisdiction extends to a decision not to impose a safeguardmeasure will have to be settled principally on the basis of the SMA.
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
10/39
Under Section 29 of the SMA, there are three requisites to enable the CTA to
acquire jurisdiction over the petition for review contemplated therein: (i) there
must be a ruling by the DTI Secretary; (ii) the petition must be filed by an
interested party adversely affected by the ruling; and (iii) such ruling must be
in connection with the imposition of a safeguard measure. The first two
requisites are clearly present. The third requisite deserves closer scrutiny.
Contrary to the stance of the public respondents and Philcemcor, in this case
where the DTI Secretary decides not to impose a safeguard measure, it is the
CTA which has jurisdiction to review his decision. The reasons are as follows:
First. Split jurisdiction is abhorred.
Essentially, respondents' position is that judicial review of the DTI Secretary's
ruling is exercised by two different courts, depending on whether or not it
imposes a safeguard measure, and in either case the court exercisingjurisdiction does so to the exclusion of the other. Thus, if the DTI decision
involves the imposition of a safeguard measure it is the CTA which has
appellate jurisdiction; otherwise, it is the Court of Appeals. Such setup is as
novel and unusual as it is cumbersome and unwise. Essentially, respondents
advocate that Section 29 of the SMA has established split appellate
jurisdiction over rulings of the DTI Secretary on the imposition of safeguard
measure.
This interpretation cannot be favored, as the Court has consistently refused to
sanction split jurisdiction.63 The power of the DTI Secretary to adopt orwithhold a safeguard measure emanates from the same statutory source, and
it boggles the mind why the appeal modality would be such that one appellate
court is qualified if what is to be reviewed is a positive determination, and it is
not if what is appealed is a negative determination. In deciding whether or not
to impose a safeguard measure, provisional or general, the DTI Secretary
would be evaluating only one body of facts and applying them to one set of
laws. The reviewing tribunal will be called upon to examine the same facts
and the same laws, whether or not the determination is positive or negative.
In short, if we were to rule for respondents we would be confirming theexercise by two judicial bodies of jurisdiction over basically the same subject
matterprecisely the split-jurisdiction situation which is anathema to the
orderly administration of justice.64 The Court cannot accept that such was the
legislative motive especially considering that the law expressly confers on the
CTA, the tribunal with the specialized competence over tax and tariff matters,
the role of judicial review without mention of any other court that may exercise
corollary or ancillary jurisdiction in relation to the SMA. The provision refers to
the Court of Appeals but only in regard to procedural rules and dispositions of
appeals from the CTA to the Court of Appeals.65
The principle enunciated in Tejada v. Homestead Property Corporation66 is
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
11/39
applicable to the case at bar:
The Court agrees with the observation of the [that] when an administrative
agency or body is conferred quasi-judicial functions, all controversies relating
to the subject matter pertaining to its specialization are deemed to be included
within the jurisdiction of said administrative agency or body. Split jurisdiction is
not favored.67
Second. The interpretation of the provisions of the SMA favors vesting
untrammeled appellate jurisdiction on the CTA.
A plain reading of Section 29 of the SMA reveals that Congress did not
expressly bar the CTA from reviewing a negative determination by the DTI
Secretary nor conferred on the Court of Appeals such review authority.
Respondents note, on the other hand, that neither did the law expressly grant
to the CTA the power to review a negative determination. However, under theclear text of the law, the CTA is vested with jurisdiction to review the ruling of
the DTI Secretary "in connection with the imposition of a safeguard measure."
Had the law been couched instead to incorporate the phrase "the ruling
imposing a safeguard measure," then respondent's claim would have
indisputable merit. Undoubtedly, the phrase "in connection with" not only
qualifies but clarifies the succeeding phrase "imposition of a safeguard
measure." As expounded later, the phrase also encompasses the opposite or
converse ruling which is the non-imposition of a safeguard measure.
In the American case of Shaw v. Delta Air Lines, Inc.,68 the United StatesSupreme Court, in interpreting a key provision of the Employee Retirement
Security Act of 1974, construed the phrase "relates to" in its normal sense
which is the same as "if it has connection with or reference to."69 There is no
serious dispute that the phrase "in connection with" is synonymous to "relates
to" or "reference to," and that all three phrases are broadly expansive. This is
affirmed not just by jurisprudential fiat, but also the acquired connotative
meaning of "in connection with" in common parlance. Consequently, with the
use of the phrase "in connection with," Section 29 allows the CTA to review
not only the ruling imposing a safeguard measure, but all other rulings related
or have reference to the application for such measure.
Now, let us determine the maximum scope and reach of the phrase "in
connection with" as used in Section 29 of the SMA. A literalist reading or
linguistic survey may not satisfy. Even the US Supreme Court in New York
State Blue Cross Plans v. Travelers Ins.70 conceded that the phrases "relate
to" or "in connection with" may be extended to the farthest stretch of
indeterminacy for, universally, relations or connections are infinite and stop
nowhere.71 Thus, in the case the US High Court, examining the same phrase
of the same provision of law involved in Shaw, resorted to looking at the
statute and its objectives as the alternative to an "uncritical literalism."72 Asimilar inquiry into the other provisions of the SMA is in order to determine the
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
12/39
scope of review accorded therein to the CTA.73
The authority to decide on the safeguard measure is vested in the DTI
Secretary in the case of non-agricultural products, and in the Secretary of the
Department of Agriculture in the case of agricultural products.74 Section 29 is
likewise explicit that only the rulings of the DTI Secretary or the Agriculture
Secretary may be reviewed by the CTA.75 Thus, the acts of other bodies that
were granted some powers by the SMA, such as the Tariff Commission, are
not subject to direct review by the CTA.
Under the SMA, the Department Secretary concerned is authorized to decide
on several matters. Within thirty (30) days from receipt of a petition seeking
the imposition of a safeguard measure, or from the date he made motu
proprio initiation, the Secretary shall make a preliminary determination on
whether the increased imports of the product under consideration
substantially cause or threaten to cause serious injury to the domesticindustry.76 Such ruling is crucial since only upon the Secretary's positive
preliminary determination that a threat to the domestic industry exists shall the
matter be referred to the Tariff Commission for formal investigation, this time,
to determine whether the general safeguard measure should be imposed or
not.77 Pursuant to a positive preliminary determination, the Secretary may
also decide that the imposition of a provisional safeguard measure would be
warranted under Section 8 of the SMA.78 The Secretary is also authorized to
decide, after receipt of the report of the Tariff Commission, whether or not to
impose the general safeguard measure, and if in the affirmative, what general
safeguard measures should be applied.79 Even after the general safeguardmeasure is imposed, the Secretary is empowered to extend the safeguard
measure,80 or terminate, reduce or modify his previous rulings on the general
safeguard measure.81
With the explicit grant of certain powers involving safeguard measures by the
SMA on the DTI Secretary, it follows that he is empowered to rule on several
issues. These are the issues which arise in connection with, or in relation to,
the imposition of a safeguard measure. They may arise at different stages
the preliminary investigation stage, the post-formal investigation stage, or the
post-safeguard measure stage yet all these issues do become ripe forresolution because an initiatory action has been taken seeking the imposition
of a safeguard measure. It is the initiatory action for the imposition of a
safeguard measure that sets the wheels in motion, allowing the Secretary to
make successive rulings, beginning with the preliminary determination.
Clearly, therefore, the scope and reach of the phrase "in connection with," as
intended by Congress, pertain to all rulings of the DTI Secretary or Agriculture
Secretary which arise from the time an application or motu proprio initiation for
the imposition of a safeguard measure is taken. Indeed, the incidents which
require resolution come to the fore only because there is an initial applicationor action seeking the imposition of a safeguard measure. From the legislative
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
13/39
standpoint, it was a matter of sense and practicality to lump up the questions
related to the initiatory application or action for safeguard measure and to
assign only one court and; that is the CTA to initially review all the rulings
related to such initiatory application or action. Both directions Congress put in
place by employing the phrase "in connection with" in the law.
Given the relative expanse of decisions subject to judicial review by the CTA
under Section 29, we do not doubt that a negative ruling refusing to impose a
safeguard measure falls within the scope of its jurisdiction. On a literal level,
such negative ruling is "a ruling of the Secretary in connection with the
imposition of a safeguard measure," as it is one of the possible outcomes that
may result from the initial application or action for a safeguard measure. On a
more critical level, the rulings of the DTI Secretary in connection with a
safeguard measure, however diverse the outcome may be, arise from the
same grant of jurisdiction on the DTI Secretary by the SMA.82 The refusal by
the DTI Secretary to grant a safeguard measure involves the same grant ofauthority, the same statutory prescriptions, and the same degree of discretion
as the imposition by the DTI Secretary of a safeguard measure.
The position of the respondents is one of "uncritical literalism"83 incongruent
with the animus of the law. Moreover, a fundamentalist approach to Section
29 is not warranted, considering the absurdity of the consequences.
Third. Interpretatio Talis In Ambiguis Semper Fienda Est, Ut Evitur
Inconveniens Et Absurdum.84
Even assuming arguendo that Section 29 has not expressly granted the CTA
jurisdiction to review a negative ruling of the DTI Secretary, the Court is
precluded from favoring an interpretation that would cause inconvenience and
absurdity.85 Adopting the respondents' position favoring the CTA's minimal
jurisdiction would unnecessarily lead to illogical and onerous results.
Indeed, it is illiberal to assume that Congress had intended to provide
appellate relief to rulings imposing a safeguard measure but not to those
declining to impose the measure. Respondents might argue that the right to
relief from a negative ruling is not lost since the applicant could, asPhilcemcor did, question such ruling through a special civil action for certiorari
under Rule 65 of the 1997 Rules of Civil Procedure, in lieu of an appeal to the
CTA. Yet these two reliefs are of differing natures and gravamen. While an
appeal may be predicated on errors of fact or errors of law, a special civil
action for certiorari is grounded on grave abuse of discretion or lack of or
excess of jurisdiction on the part of the decider. For a special civil action for
certiorari to succeed, it is not enough that the questioned act of the
respondent is wrong. As the Court clarified in Sempio v. Court of Appeals:
A tribunal, board or officer acts without jurisdiction if it/he does not have thelegal power to determine the case. There is excess of jurisdiction where,
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
14/39
being clothed with the power to determine the case, the tribunal, board or
officer oversteps its/his authority as determined by law. And there is grave
abuse of discretion where the tribunal, board or officer acts in a capricious,
whimsical, arbitrary or despotic manner in the exercise of his judgment as to
be said to be equivalent to lack of jurisdiction. Certiorari is often resorted to in
order to correct errors of jurisdiction. Where the error is one of law or of fact,
which is a mistake of judgment, appeal is the remedy.86
It is very conceivable that the DTI Secretary, after deliberate thought and
careful evaluation of the evidence, may either make a negative preliminary
determination as he is so empowered under Section 7 of the SMA, or refuse
to adopt the definitive safeguard measure under Section 13 of the same law.
Adopting the respondents' theory, this negative ruling is susceptible to
reversal only through a special civil action for certiorari, thus depriving the
affected party the chance to elevate the ruling on appeal on the rudimentary
grounds of errors in fact or in law. Instead, and despite whatever indicationsthat the DTI Secretary acted with measure and within the bounds of his
jurisdiction are, the aggrieved party will be forced to resort to a gymnastic
exercise, contorting the straight and narrow in an effort to discombobulate the
courts into believing that what was within was actually beyond and what was
studied and deliberate actually whimsical and capricious. What then would be
the remedy of the party aggrieved by a negative ruling that simply erred in
interpreting the facts or the law? It certainly cannot be the special civil action
for certiorari, for as the Court held in Silverio v. Court of Appeals: "Certiorari is
a remedy narrow in its scope and inflexible in its character. It is not a general
utility tool in the legal workshop."87
Fortunately, this theoretical quandary need not come to pass. Section 29 of
the SMA is worded in such a way that it places under the CTA's judicial review
all rulings of the DTI Secretary, which are connected with the imposition of a
safeguard measure. This is sound and proper in light of the specialized
jurisdiction of the CTA over tax matters. In the same way that a question of
whether to tax or not to tax is properly a tax matter, so is the question of
whether to impose or not to impose a definitive safeguard measure.
On another note, the second paragraph of Section 29 similarly reveals thelegislative intent that rulings of the DTI Secretary over safeguard measures
should first be reviewed by the CTA and not the Court of Appeals. It reads:
The petition for review shall comply with the same requirements and shall
follow the same rules of procedure and shall be subject to the same
disposition as in appeals in connection with adverse rulings on tax matters to
the Court of Appeals.
This is the only passage in the SMA in which the Court of Appeals is
mentioned. The express wish of Congress is that the petition conform to therequirements and procedure under Rule 43 of the Rules of Civil Procedure.
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
15/39
Since Congress mandated that the form and procedure adopted be analogous
to a review of a CTA ruling by the Court of Appeals, the legislative
contemplation could not have been that the appeal be directly taken to the
Court of Appeals.
Issue of Binding Effect of Tariff
Commission's Factual Determination
on DTI Secretary.
The next issue for resolution is whether the factual determination made by the
Tariff Commission under the SMA is binding on the DTI Secretary. Otherwise
stated, the question is whether the DTI Secretary may impose general
safeguard measures in the absence of a positive final determination by the
Tariff Commission.
The Court of Appeals relied upon Section 13 of the SMA in ruling that thefindings of the Tariff Commission do not necessarily constitute a final decision.
Section 13 details the procedure for the adoption of a safeguard measure, as
well as the steps to be taken in case there is a negative final determination.
The implication of the Court of Appeals' holding is that the DTI Secretary may
adopt a definitive safeguard measure, notwithstanding a negative
determination made by the Tariff Commission.
Undoubtedly, Section 13 prescribes certain limitations and restrictions before
general safeguard measures may be imposed. However, the most
fundamental restriction on the DTI Secretary's power in that respect iscontained in Section 5 of the SMAthat there should first be a positive final
determination of the Tariff Commissionwhich the Court of Appeals curiously
all but ignored. Section 5 reads:
Sec. 5. Conditions for the Application of General Safeguard Measures. The
Secretary shall apply a general safeguard measure upon a positive final
determination of the [Tariff] Commission that a product is being imported into
the country in increased quantities, whether absolute or relative to the
domestic production, as to be a substantial cause of serious injury or threat
thereof to the domestic industry; however, in the case of non-agriculturalproducts, the Secretary shall first establish that the application of such
safeguard measures will be in the public interest. (emphasis supplied)
The plain meaning of Section 5 shows that it is the Tariff Commission that has
the power to make a "positive final determination." This power lodged in the
Tariff Commission, must be distinguished from the power to impose the
general safeguard measure which is properly vested on the DTI Secretary.88
All in all, there are two condition precedents that must be satisfied before the
DTI Secretary may impose a general safeguard measure on grey Portlandcement. First, there must be a positive final determination by the Tariff
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
16/39
Commission that a product is being imported into the country in increased
quantities (whether absolute or relative to domestic production), as to be a
substantial cause of serious injury or threat to the domestic industry. Second,
in the case of non-agricultural products the Secretary must establish that the
application of such safeguard measures is in the public interest.89 As
Southern Cross argues, Section 5 is quite clear-cut, and it is impossible to
finagle a different conclusion even through overarching methods of statutory
construction. There is no safer nor better settled canon of interpretation that
when language is clear and unambiguous it must be held to mean what it
plainly expresses:90 In the quotable words of an illustrious member of this
Court, thus:
[I]f a statute is clear, plain and free from ambiguity, it must be given its literal
meaning and applied without attempted interpretation. The verba legis or plain
meaning rule rests on the valid presumption that the words employed by the
legislature in a statute correctly express its intent or will and preclude thecourt from construing it differently. The legislature is presumed to know the
meaning of the words, to have used words advisedly, and to have expressed
its intent by the use of such words as are found in the statute.91
Moreover, Rule 5 of the Implementing Rules and Regulations of the SMA,92
which interprets Section 5 of the law, likewise requires a positive final
determination on the part of the Tariff Commission before the application of
the general safeguard measure.
The SMA establishes a distinct allocation of functions between the TariffCommission and the DTI Secretary. The plain meaning of Section 5 shows
that it is the Tariff Commission that has the power to make a "positive final
determination." This power, which belongs to the Tariff Commission, must be
distinguished from the power to impose general safeguard measure properly
vested on the DTI Secretary. The distinction is vital, as a "positive final
determination" clearly antecedes, as a condition precedent, the imposition of a
general safeguard measure. At the same time, a positive final determination
does not necessarily result in the imposition of a general safeguard measure.
Under Section 5, notwithstanding the positive final determination of the Tariff
Commission, the DTI Secretary is tasked to decide whether or not that theapplication of the safeguard measures is in the public interest.
It is also clear from Section 5 of the SMA that the positive final determination
to be undertaken by the Tariff Commission does not entail a mere gathering of
statistical data. In order to arrive at such determination, it has to establish
causal linkages from the statistics that it compiles and evaluates: after finding
there is an importation in increased quantities of the product in question, that
such importation is a substantial cause of serious threat or injury to the
domestic industry.
The Court of Appeals relies heavily on the legislative record of a
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
17/39
congressional debate during deliberations on the SMA to assert a purported
legislative intent that the findings of the Tariff Commission do not bind the DTI
Secretary.93 Yet as explained earlier, the plain meaning of Section 5
emphasizes that only if the Tariff Commission renders a positive determination
could the DTI Secretary impose a safeguard measure. Resort to the
congressional records to ascertain legislative intent is not warranted if a
statute is clear, plain and free from ambiguity. The legislature is presumed to
know the meaning of the words, to have used words advisedly, and to have
expressed its intent by the use of such words as are found in the statute.94
Indeed, the legislative record, if at all to be availed of, should be approached
with extreme caution, as legislative debates and proceedings are powerless to
vary the terms of the statute when the meaning is clear.95 Our holding in Civil
Liberties Union v. Executive Secretary96 on the resort to deliberations of the
constitutional convention to interpret the Constitution is likewise appropriate in
ascertaining statutory intent:
While it is permissible in this jurisdiction to consult the debates and
proceedings of the constitutional convention in order to arrive at the reason
and purpose of the resulting Constitution, resort thereto may be had only
when other guides fail as said proceedings are powerless to vary the terms of
the Constitution when the meaning is clear. Debates in the constitutional
convention "are of value as showing the views of the individual members, and
as indicating the reasons for their votes, but they give us no light as to the
views of the large majority who did not talk xxx. We think it safer to construe
the constitution from what appears upon its face."97
Moreover, it is easy to selectively cite passages, sometimes out of their proper
context, in order to assert a misleading interpretation. The effect can be
dangerous. Minority or solitary views, anecdotal ruminations, or even the
occasional crude witticisms, may improperly acquire the mantle of legislative
intent by the sole virtue of their publication in the authoritative congressional
record. Hence, resort to legislative deliberations is allowable when the statute
is crafted in such a manner as to leave room for doubt on the real intent of the
legislature.
Section 5 plainly evinces legislative intent to restrict the DTI Secretary's power
to impose a general safeguard measure by preconditioning such imposition
on a positive determination by the Tariff Commission. Such legislative intent
should be given full force and effect, as the executive power to impose
definitive safeguard measures is but a delegated powerthe power of
taxation, by nature and by command of the fundamental law, being a preserve
of the legislature.98 Section 28(2), Article VI of the 1987 Constitution confirms
the delegation of legislative power, yet ensures that the prerogative of
Congress to impose limitations and restrictions on the executive exercise of
this power:
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
18/39
The Congress may, by law, authorize the President to fix within specified
limits, and subject to such limitations and restrictions as it may impose, tariff
rates, import and export quotas, tonnage and wharfage dues, and other duties
or imposts within the framework of the national development program of the
Government.99
The safeguard measures which the DTI Secretary may impose under the
SMA may take the following variations, to wit: (a) an increase in, or imposition
of any duty on the imported product; (b) a decrease in or the imposition of a
tariff-rate quota on the product; (c) a modification or imposition of any
quantitative restriction on the importation of the product into the Philippines;
(d) one or more appropriate adjustment measures, including the provision of
trade adjustment assistance; and (e) any combination of the above-described
actions. Except for the provision of trade adjustment assistance, the
measures enumerated by the SMA are essentially imposts, which precisely
are the subject of delegation under Section 28(2), Article VI of the 1987Constitution.100
This delegation of the taxation power by the legislative to the executive is
authorized by the Constitution itself.101 At the same time, the Constitution
also grants the delegating authority (Congress) the right to impose restrictions
and limitations on the taxation power delegated to the President.102 The
restrictions and limitations imposed by Congress take on the mantle of a
constitutional command, which the executive branch is obliged to observe.
The SMA empowered the DTI Secretary, as alter ego of the President,103 toimpose definitive general safeguard measures, which basically are tariff
imposts of the type spoken of in the Constitution. However, the law did not
grant him full, uninhibited discretion to impose such measures. The DTI
Secretary authority is derived from the SMA; it does not flow from any
inherent executive power. Thus, the limitations imposed by Section 5 are
absolute, warranted as they are by a constitutional fiat.104
Philcemcor cites our 1912 ruling in Lamb v. Phipps105 to assert that the DTI
Secretary, having the final decision on the safeguard measure, has the power
to evaluate the findings of the Tariff Commission and make an independentjudgment thereon. Given the constitutional and statutory limitations governing
the present case, the citation is misplaced. Lamb pertained to the discretion of
the Insular Auditor of the Philippine Islands, whom, as the Court recognized,
"[t]he statutes of the United States require[d] xxx to exercise his judgment
upon the legality xxx [of] provisions of law and resolutions of Congress
providing for the payment of money, the means of procuring testimony upon
which he may act."106
Thus in Lamb, while the Court recognized the wide latitude of discretion that
may have been vested on the Insular Auditor, it also recognized that suchlatitude flowed from, and is consequently limited by, statutory grant. However,
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
19/39
in this case, the provision of the Constitution in point expressly recognizes the
authority of Congress to prescribe limitations in the case of tariffs,
export/import quotas and other such safeguard measures. Thus, the broad
discretion granted to the Insular Auditor of the Philippine Islands cannot be
analogous to the discretion of the DTI Secretary which is circumscribed by
Section 5 of the SMA.
For that matter, Cario v. Commissioner on Human Rights,107 likewise cited
by Philcemcor, is also inapplicable owing to the different statutory regimes
prevailing over that case and the present petition. In Cario, the Court ruled
that the constitutional power of the Commission on Human Rights (CHR) to
investigate human rights' violations did not extend to adjudicating claims on
the merits.108 Philcemcor claims that the functions of the Tariff Commission
being "only investigatory," it could neither decide nor adjudicate.109
The applicable law governing the issue in Cario is Section 18, Article XIII ofthe Constitution, which delineates the powers and functions of the CHR. The
provision does not vest on the CHR the power to adjudicate cases, but only to
investigate all forms of human rights violations.110 Yet, without modifying the
thorough disquisition of the Court in Cario on the general limitations on the
investigatory power, the precedent is inapplicable because of the difference in
the involved statutory frameworks. The Constitution does not repose binding
effect on the results of the CHR's investigation.111 On the other hand,
through Section 5 of the SMA and under the authority of Section 28(2), Article
VI of the Constitution, Congress did intend to bind the DTI Secretary to the
determination made by the Tariff Commission.112 It is of no consequence thatsuch determination results from the exercise of investigatory powers by the
Tariff Commission since Congress is well within its constitutional mandate to
limit the authority of the DTI Secretary to impose safeguard measures in the
manner that it sees fit.
The Court of Appeals and Philcemcor also rely on Section 13 of the SMA and
Rule 13 of the SMA's Implementing Rules in support of the view that the DTI
Secretary may decide independently of the determination made by the Tariff
Commission. Admittedly, there are certain infelicities in the language of
Section 13 and Rule 13. But reliance should not be placed on the textualimprecisions. Rather, Section 13 and Rule 13 must be viewed in light of the
fundamental prescription imposed by Section 5. 113
Section 13 of the SMA lays down the procedure to be followed after the Tariff
Commission renders its report. The provision reads in full:
SEC. 13. Adoption of Definitive Measures. Upon its positive determination,
the Commission shall recommend to the Secretary an appropriate definitive
measure, in the form of:
(a) An increase in, or imposition of, any duty on the imported product;
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
20/39
(b) A decrease in or the imposition of a tariff-rate quota (MAV) on the product;
(c) A modification or imposition of any quantitative restriction on the
importation of the product into the Philippines;
(d) One or more appropriate adjustment measures, including the provision of
trade adjustment assistance;
(e) Any combination of actions described in subparagraphs (a) to (d).
The Commission may also recommend other actions, including the initiation of
international negotiations to address the underlying cause of the increase of
imports of the product, to alleviate the injury or threat thereof to the domestic
industry, and to facilitate positive adjustment to import competition.
The general safeguard measure shall be limited to the extent of redressing orpreventing the injury and to facilitate adjustment by the domestic industry from
the adverse effects directly attributed to the increased imports: Provided,
however, That when quantitative import restrictions are used, such measures
shall not reduce the quantity of imports below the average imports for the
three (3) preceding representative years, unless clear justification is given that
a different level is necessary to prevent or remedy a serious injury.
A general safeguard measure shall not be applied to a product originating
from a developing country if its share of total imports of the product is less
than three percent (3%): Provided, however, That developing countries withless than three percent (3%) share collectively account for not more than nine
percent (9%) of the total imports.
The decision imposing a general safeguard measure, the duration of which is
more than one (1) year, shall be reviewed at regular intervals for purposes of
liberalizing or reducing its intensity. The industry benefiting from the
application of a general safeguard measure shall be required to show positive
adjustment within the allowable period. A general safeguard measure shall be
terminated where the benefiting industry fails to show any improvement, as
may be determined by the Secretary.
The Secretary shall issue a written instruction to the heads of the concerned
government agencies to implement the appropriate general safeguard
measure as determined by the Secretary within fifteen (15) days from receipt
of the report.
In the event of a negative final determination, or if the cash bond is in excess
of the definitive safeguard duty assessed, the Secretary shall immediately
issue, through the Secretary of Finance, a written instruction to the
Commissioner of Customs, authorizing the return of the cash bond or theremainder thereof, as the case may be, previously collected as provisional
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
21/39
general safeguard measure within ten (10) days from the date a final decision
has been made: Provided, That the government shall not be liable for any
interest on the amount to be returned. The Secretary shall not accept for
consideration another petition from the same industry, with respect to the
same imports of the product under consideration within one (1) year after the
date of rendering such a decision.
When the definitive safeguard measure is in the form of a tariff increase, such
increase shall not be subject or limited to the maximum levels of tariff as set
forth in Section 401(a) of the Tariff and Customs Code of the Philippines.
To better comprehend Section 13, note must be taken of the distinction
between the investigatory and recommendatory functions of the Tariff
Commission under the SMA.
The word "determination," as used in the SMA, pertains to the factual findingson whether there are increased imports into the country of the product under
consideration, and on whether such increased imports are a substantial cause
of serious injury or threaten to substantially cause serious injury to the
domestic industry.114 The SMA explicitly authorizes the DTI Secretary to
make a preliminary determination,115 and the Tariff Commission to make the
final determination.116 The distinction is fundamental, as these functions are
not interchangeable. The Tariff Commission makes its determination only after
a formal investigation process, with such investigation initiated only if there is
a positive preliminary determination by the DTI Secretary under Section 7 of
the SMA.117 On the other hand, the DTI Secretary may impose definitivesafeguard measure only if there is a positive final determination made by the
Tariff Commission.118
In contrast, a "recommendation" is a suggested remedial measure submitted
by the Tariff Commission under Section 13 after making a positive final
determination in accordance with Section 5. The Tariff Commission is not
empowered to make a recommendation absent a positive final determination
on its part.119 Under Section 13, the Tariff Commission is required to
recommend to the [DTI] Secretary an "appropriate definitive measure."120
The Tariff Commission "may also recommend other actions, including theinitiation of international negotiations to address the underlying cause of the
increase of imports of the products, to alleviate the injury or threat thereof to
the domestic industry and to facilitate positive adjustment to import
competition."121
The recommendations of the Tariff Commission, as rendered under Section
13, are not obligatory on the DTI Secretary. Nothing in the SMA mandates the
DTI Secretary to adopt the recommendations made by the Tariff Commission.
In fact, the SMA requires that the DTI Secretary establish that the application
of such safeguard measures is in the public interest, notwithstanding the TariffCommission's recommendation on the appropriate safeguard measure based
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
22/39
on its positive final determination.122 The non-binding force of the Tariff
Commission's recommendations is congruent with the command of Section
28(2), Article VI of the 1987 Constitution that only the President may be
empowered by the Congress to impose appropriate tariff rates, import/export
quotas and other similar measures.123 It is the DTI Secretary, as alter ego of
the President, who under the SMA may impose such safeguard measures
subject to the limitations imposed therein. A contrary conclusion would in
essence unduly arrogate to the Tariff Commission the executive power to
impose the appropriate tariff measures. That is why the SMA empowers the
DTI Secretary to adopt safeguard measures other than those recommended
by the Tariff Commission.
Unlike the recommendations of the Tariff Commission, its determination has a
different effect on the DTI Secretary. Only on the basis of a positive final
determination made by the Tariff Commission under Section 5 can the DTI
Secretary impose a general safeguard measure. Clearly, then the DTISecretary is bound by the determination made by the Tariff Commission.
Some confusion may arise because the sixth paragraph of Section 13124
uses the variant word "determined" in a different context, as it contemplates
"the appropriate general safeguard measure as determined by the Secretary
within fifteen (15) days from receipt of the report." Quite plainly, the word
"determined" in this context pertains to the DTI Secretary's power of choice of
the appropriate safeguard measure, as opposed to the Tariff Commission's
power to determine the existence of conditions necessary for the imposition of
any safeguard measure. In relation to Section 5, such choice also relates tothe mandate of the DTI Secretary to establish that the application of
safeguard measures is in the public interest, also within the fifteen (15) day
period. Nothing in Section 13 contradicts the instruction in Section 5 that the
DTI Secretary is allowed to impose the general safeguard measures only if
there is a positive determination made by the Tariff Commission.
Unfortunately, Rule 13.2 of the Implementing Rules of the SMA is captioned
"Final Determination by the Secretary." The assailed Decision and Philcemcor
latch on this phraseology to imply that the factual determination rendered by
the Tariff Commission under Section 5 may be amended or reversed by theDTI Secretary. Of course, implementing rules should conform, not clash, with
the law that they seek to implement, for a regulation which operates to create
a rule out of harmony with the statute is a nullity.125 Yet imperfect
draftsmanship aside, nothing in Rule 13.2 implies that the DTI Secretary can
set aside the determination made by the Tariff Commission under the aegis of
Section 5. This can be seen by examining the specific provisions of Rule 13.2,
thus:
RULE 13.2. Final Determination by the Secretary
RULE 13.2.a. Within fifteen (15) calendar days from receipt of the Report of
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
23/39
the Commission, the Secretary shall make a decision, taking into
consideration the measures recommended by the Commission.
RULE 13.2.b. If the determination is affirmative, the Secretary shall issue,
within two (2) calendar days after making his decision, a written instruction to
the heads of the concerned government agencies to immediately implement
the appropriate general safeguard measure as determined by him. Provided,
however, that in the case of non-agricultural products, the Secretary shall first
establish that the imposition of the safeguard measure will be in the public
interest.
RULE 13.2.c. Within two (2) calendar days after making his decision, the
Secretary shall also order its publication in two (2) newspapers of general
circulation. He shall also furnish a copy of his Order to the petitioner and other
interested parties, whether affirmative or negative. (Emphasis supplied.)
Moreover, the DTI Secretary does not have the power to review the findings of
the Tariff Commission for it is not subordinate to the Department of Trade and
Industry ("DTI"). It falls under the supervision, not of the DTI nor of the
Department of Finance (as mistakenly asserted by Southern Cross),126 but of
the National Economic Development Authority, an independent planning
agency of the government of co-equal rank as the DTI.127 As the supervision
and control of a Department Secretary is limited to the bureaus, offices, and
agencies under him,128 the DTI Secretary generally cannot exercise review
authority over actions of the Tariff Commission. Neither does the SMA
specifically authorize the DTI Secretary to alter, amend or modify in any waythe determination made by the Tariff Commission. The most that the DTI
Secretary could do to express displeasure over the Tariff Commission's
actions is to ignore its recommendation, but not its determination.
The word "determination" as used in Rule 13.2 of the Implementing Rules is
dissonant with the same word as employed in the SMA, which in the latter
case is undeviatingly in reference to the determination made by the Tariff
Commission. Beyond the resulting confusion, however, the divergent use in
Rule 13.2 is explicable as the Rule textually pertains to the power of the DTI
Secretary to review the recommendations of the Tariff Commission, not thelatter's determination. Indeed, an examination of the specific provisions show
that there is no real conflict to reconcile. Rule 13.2 respects the logical order
imposed by the SMA. The Rule does not remove the essential requirement
under Section 5 that a positive final determination be made by the Tariff
Commission before a definitive safeguard measure may be imposed by the
DTI Secretary.
The assailed Decision characterizes the findings of the Tariff Commission as
merely recommendatory and points to the DTI Secretary as the authority who
renders the final decision.129 At the same time, Philcemcor asserts that theTariff Commission's functions are merely investigatory, and as such do not
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
24/39
include the power to decide or adjudicate. These contentions, viewed in the
context of the fundamental requisite set forth by Section 5, are untenable.
They run counter to the statutory prescription that a positive final
determination made by the Tariff Commission should first be obtained before
the definitive safeguard measures may be laid down.
Was it anomalous for Congress to have provided for a system whereby the
Tariff Commission may preclude the DTI, an office of higher rank, from
imposing a safeguard measure? Of course, this Court does not inquire into
the wisdom of the legislature but only charts the boundaries of powers and
functions set in its enactments. But then, it is not difficult to see the internal
logic of this statutory framework.
For one, as earlier stated, the DTI cannot exercise review powers over the
Tariff Commission which is not its subordinate office.
Moreover, the mechanism established by Congress establishes a measure of
check and balance involving two different governmental agencies with
disparate specializations. The matter of safeguard measures is of such
national importance that a decision either to impose or not to impose then
could have ruinous effects on companies doing business in the Philippines.
Thus, it is ideal to put in place a system which affords all due deliberation and
calls to fore various governmental agencies exercising their particular
specializations.
Finally, if this arrangement drawn up by Congress makes it difficult to obtain ageneral safeguard measure, it is because such safeguard measure is the
exception, rather than the rule. The Philippines is obliged to observe its
obligations under the GATT, under whose framework trade liberalization, not
protectionism, is laid down. Verily, the GATT actually prescribes conditions
before a member-country may impose a safeguard measure. The pertinent
portion of the GATT Agreement on Safeguards reads:
2. A Member may only apply a safeguard measure to a product only if that
member has determined, pursuant to the provisions set out below, that such
product is being imported into its territory in such increased quantities,absolute or relative to domestic production, and under such conditions as to
cause or threaten to cause serious injury to the domestic industry that
produces like or directly competitive products.130
3. (a) A Member may apply a safeguard measure only following an
investigation by the competent authorities of that Member pursuant to
procedures previously established and made public in consonance with Article
X of the GATT 1994. This investigation shall include reasonable public notice
to all interested parties and public hearings or other appropriate means in
which importers, exporters and other interested parties could presentevidence and their views, including the opportunity to respond to the
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
25/39
presentations of other parties and to submit their views, inter alia, as to
whether or not the application of a safeguard measure would be in the public
interest. The competent authorities shall publish a report setting forth their
findings and reasoned conclusions reached on all pertinent issues of fact and
law.131
The SMA was designed not to contradict the GATT, but to complement it. The
two requisites laid down in Section 5 for a positive final determination are the
same conditions provided under the GATT Agreement on Safeguards for the
application of safeguard measures by a member country. Moreover, the
investigatory procedure laid down by the SMA conforms to the procedure
required by the GATT Agreement on Safeguards. Congress has chosen the
Tariff Commission as the competent authority to conduct such investigation.
Southern Cross stresses that applying the provision of the GATT Agreement
on Safeguards, the Tariff Commission is clearly empowered to arrive at
binding conclusions.132 We agree: binding on the DTI Secretary is the TariffCommission's determinations on whether a product is imported in increased
quantities, absolute or relative to domestic production and whether any such
increase is a substantial cause of serious injury or threat thereof to the
domestic industry.133
Satisfied as we are with the proper statutory paradigm within which the SMA
should be analyzed, the flaws in the reasoning of the Court of Appeals and in
the arguments of the respondents become apparent. To better understand the
dynamics of the procedure set up by the law leading to the imposition of
definitive safeguard measures, a brief step-by-step recount thereof is in order.
1. After the initiation of an action involving a general safeguard measure,134
the DTI Secretary makes a preliminary determination whether the increased
imports of the product under consideration substantially cause or threaten to
substantially cause serious injury to the domestic industry,135 and whether
the imposition of a provisional measure is warranted under Section 8 of the
SMA.136 If the preliminary determination is negative, it is implied that no
further action will be taken on the application.
2. When his preliminary determination is positive, the Secretary immediatelytransmits the records covering the application to the Tariff Commission for
immediate formal investigation.137
3. The Tariff Commission conducts its formal investigation, keyed towards
making a final determination. In the process, it holds public hearings,
providing interested parties the opportunity to present evidence or otherwise
be heard.138 To repeat, Section 5 enumerates what the Tariff Commission is
tasked to determine: (a) whether a product is being imported into the country
in increased quantities, irrespective of whether the product is absolute or
relative to the domestic production; and (b) whether the importation inincreased quantities is such that it causes serious injury or threat to the
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
26/39
domestic industry.139 The findings of the Tariff Commission as to these
matters constitute the final determination, which may be either positive or
negative.
4. Under Section 13 of the SMA, if the Tariff Commission makes a positive
determination, the Tariff Commission "recommends to the [DTI] Secretary an
appropriate definitive measure." The Tariff Commission "may also recommend
other actions, including the initiation of international negotiations to address
the underlying cause of the increase of imports of the products, to alleviate
the injury or threat thereof to the domestic industry, and to facilitate positive
adjustment to import competition."140
5. If the Tariff Commission makes a positive final determination, the DTI
Secretary is then to decide, within fifteen (15) days from receipt of the report,
as to what appropriate safeguard measures should he impose.
6. However, if the Tariff Commission makes a negative final determination, the
DTI Secretary cannot impose any definitive safeguard measure. Under
Section 13, he is instructed instead to return whatever cash bond was paid by
the applicant upon the initiation of the action for safeguard measure.
The Effect of the Court's Decision
The Court of Appeals erred in remanding the case back to the DTI Secretary,
with the instruction that the DTI Secretary may impose a general safeguard
measure even if there is no positive final determination from the TariffCommission. More crucially, the Court of Appeals could not have acquired
jurisdiction over Philcemcor's petition for certiorari in the first place, as Section
29 of the SMA properly vests jurisdiction on the CTA. Consequently, the
assailed Decision is an absolute nullity, and we declare it as such.
What is the effect of the nullity of the assailed Decision on the 5 June 2003
Decision of the DTI Secretary imposing the general safeguard measure? We
have recognized that any initial judicial review of a DTI ruling in connection
with the imposition of a safeguard measure belongs to the CTA. At the same
time, the Court also recognizes the fundamental principle that a null and voidjudgment cannot produce any legal effect. There is sufficient cause to
establish that the 5 June 2003 Decision of the DTI Secretary resulted from the
assailed Court of Appeals Decision, even if the latter had not yet become
final. Conversely, it can be concluded that it was because of the putative
imprimatur of the Court of Appeals' Decision that the DTI Secretary issued his
ruling imposing the safeguard measure. Since the 5 June 2003 Decision
derives its legal effect from the void Decision of the Court of Appeals, this
ruling of the DTI Secretary is consequently void. The spring cannot rise higher
than the source.
The DTI Secretary himself acknowledged that he drew stimulating force from
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
27/39
the appellate court's Decision for in his own 5 June 2003 Decision, he
declared:
From the aforementioned ruling, the CA has remanded the case to the DTI
Secretary for a final decision. Thus, there is no legal impediment for the
Secretary to decide on the application.141
The inescapable conclusion is that the DTI Secretary needed the assailed
Decision of the Court of Appeals to justify his rendering a second Decision.
He explicitly invoked the Court of Appeals' Decision as basis for rendering his
5 June 2003 ruling, and implicitly recognized that without such Decision he
would not have the authority to revoke his previous ruling and render a new,
obverse ruling.
It is clear then that the 25 June 2003 Decision of the DTI Secretary is a
product of the void Decision, it being an attempt to carry out such nulljudgment. There is therefore no choice but to declare it void as well, lest we
sanction the perverse existence of a fruit from a non-existent tree. It does not
even matter what the disposition of the 25 June 2003 Decision was, its nullity
would be warranted even if the DTI Secretary chose to uphold his earlier
ruling denying the application for safeguard measures.
It is also an unfortunate spectacle to behold the DTI Secretary, seeking to
enforce a judicial decision which is not yet final and actually pending review
on appeal. Had it been a judge who attempted to enforce a decision that is not
yet final and executory, he or she would have readily been subjected tosanction by this Court. The DTI Secretary may be beyond the ambit of
administrative review by this Court, but we are capacitated to allocate the
boundaries set by the law of the land and to exact fealty to the legal order,
especially from the instrumentalities and officials of government.
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court
of Appeals is DECLARED NULL AND VOID and SET ASIDE. The Decision of
the DTI Secretary dated 25 June 2003 is also DECLARED NULL AND VOID
and SET ASIDE. No Costs.
SO ORDERED.
Puno, (Chairman), Quisumbing, Austria-Martinez, and Callejo, Sr., JJ., concur.
Footnotes
1 Globalization is "the removal of barriers to free trade and the closer
integration of national economies." In recent times, protests against
globalization have entered a new stage. Riots and demonstrations against thepolicies of and actions by institutions of globalization have become
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
28/39
commonplace even in developed countries. France's Jacques Chirac has
expressed concern that globalization is not making life better for those most in
need of its promised benefits. J. Stiglitz, , Globalization and Its Discontents,
pp. 1-4 (2002).
2 The policy objective that guides the General Safeguard Measures Act is
enunciated in Section 2 thereof, which reads:
"Section 2. Declaration of Policy. The State shall promote the
competitiveness of domestic industries and producers based on sound
industrial and agricultural development policies, and the efficient use of
human, natural and technical resources. In pursuit of this goal and in the
public interest, the State shall provide safeguard measures to protect
domestic industries and producers from increased imports which cause or
threaten to cause serious injury to those domestic industries and producers."
3 GATT was a collection of treaties governing access to the economics of
treaty adherents with no institutionalized body administering the agreements
or dependable system of dispute settlement. (See Taada v. Angara, 338 Phil.
546, 556 (1997)) Originally formulated in 1947, the GATT was updated in
1994 to take into account substantive and institutional changes negotiated in
the Uruguay Round. A comprehensive history of the GATT is recounted in
Footnote No. 1 of Taada v. Angara, id. at 557-561.
4 Supra note 2.
5 Rollo, p. 14.
6 Philcemcor has since renamed itself the Cement Manufacturers Association
of the Philippines. Rollo, p. 1364.
7 Union Cement Corporation, Northern Cement Corporation, Limay Grinding
Mill Corporation, Republic Cement Corporation, Continental Operating
Corporation, Rizal Cement Company, Inc., Solid Cement Corporation, FR
Cement Corporation, Union Cement Corporation, Fortune Cement
Corporation, Apo Cement Corporation, Lloyds-Richfield Industrial Corporation,Grand Cement Manufacturing Corporation, Alsons Cement Corporation, Iligan
Cement Corporation, Mindanao Portland Cement Corporation, Pacific Cement
Company, Inc., and Union Cement Corporation. Vide "Staff Report on Formal
Investigation of Safeguard Measures Case Against Importations of Gray
Portland Cement." Rollo, p. 132.
8 Vide "Staff Report on Formal Investigation of Safeguard Measures Case
Against Importations of Gray Portland Cement." Rollo at 133. This fact was
confirmed by counsel for Philcemcor during the oral argument before this
Court on 18 February 2004. See TSN, pp. 157-158, 18 February 2004.
-
8/13/2019 Southern Cross Cement Corporation vs PCMC
29/39
9 Philcemcor's application covered gray Portland cement of all types and
excluded white Portland cement, aluminous cement, and masonry cement.
Rollo, p. 127.
10 Namely, Philcemcor in behalf of twelve (12) of its member-companies, as
follows: Alsons Cement Corporation; Apo Cement Corporation; Continental
Operating Corporation, Fortune Cement Corporation; FR Cement
Corporation; Iligan Cement Corporation; Lloyds Richfield Industrial
Corporation; Mindanao Portland Cement Corporation; Republic Cement
Corporation; Rizal Cement Company, Inc.; Solid Cement Corporation; and
Union Cement Corporation. The other cement producers (i.e., Limay Grinding
Mill Corporation and Pacific Cement Philippines, Inc.) that did not join the
application nevertheless supported the application for the imposition of the
safeguard measures. Rollo, p. 127. Limay Grinding Mill Corporation and
Pacific Cement Philippines, Inc. did not join the application yet nevertheless
supported the same. Id.
11 Ibid.
12 Id. at 128.
13 Ibid. Customs Memorandum Order No. 38-2001 directed that all
importations from all countries of gray Portland cement, including blended
Portland cement that contains pozzolan, slag or other additives, whether in
bulk or bags, classified under HS Codes 2523.29 00 and 2523.90 00, shall be
imposed, in addition to taxes and duties and other charges, a cash bondamounting to P20.60 per 40-kg. bag or its equivalent in bulk.
14 Id. at 129.
15 Also in attendance were representatives from Philcemcor, Lafarge, Cemex,
TCC Cement Corporation, Southern Cross Cement Corporation,
PriceWaterhouse Coopers, Samstone Infra-Construction Supply, Westpoint
Industrial Sales Company, Cohaco Trading Corporation, Philippine
Constructors Association, Confederation of Homeowners Association for
Reforms on Governance and Environment, Ssangyong Corporation, NationalConstructors Association of the Philippines, Private Sector Consultative
Council for Shelter, Fair Trade Alliance,